Republic of Indonesia: Community-Focused Investments to Address Deforestation and Forest Degradation Project

Transcription

1 Resettlement Framework Project Number: September 2016 Republic of Indonesia: Community-Focused Investments to Address Deforestation and Forest Degradation Project Prepared by the Ministry of Environment and Forestry for the Asian Development Bank.

2 ii CURRENCY EQUIVALENTS (as of 2 September 2016) Currency unit - rupiah (Rp) Rp1.00 = $ $1.00 = Rp13,280 ABBREVIATIONS ADB Asian Development Bank AP affected person BPN Badan Pertanahan Nasional (National Land Agency) DMS detailed measurement survey EA executing agency FMU Kesatuan Pengelolaan Hutan (forest management unit) GOI Government of Indonesia IA implementing agency IR involuntary resettlement LA land acquisition LARF land acquisition and resettlement framework LARP land acquisition and resettlement plan PISU project implementation supporting unit REDD+ reducing emissions from deforestation and forest degradation, conservation, sustainable management of forests, and enhancement of forest carbon stocks SPS Safeguards Policy Statement

3 DEFINITIONS OF TERMS Affected Community/ Households/ Persons/ Entitled Party Census of affected persons Compensation Corridor of Impact Customary rights and its equivalents in indigenous peoples Cut-off date Detailed Measurement Survey Refers to any person or persons, customary or local community, private or public institution who are physically displaced (loss of residential land, or loss of shelter) and/or economically displaced (loss of land, assets, access to assets, income sources, or means of livelihood) as result of i) acquisition of land; ii) restriction on land use or on access to legally designated parks and protected areas. The affected community/households/person are those who control or possess an object land acquisition. The census is a count of all displaced persons irrespective of their titled or non-titled land ownership status. Its purpose is to accurately document the number of displaced persons and to create an inventory of their losses finalized on the basis of a detailed measurement survey (DMS). Proper and equitable replacement provided in the form of cash or other agreed in kind at replacement cost to the affected person/ entitled party in the process of land acquisition / resettlement for the assets and livelihoods lost or affected by the project. Area, which is impacted by civil works in the implementation of any FIP subproject. It is important in two particular respects: (a) Legally as the area within which AHs will be entitled to compensation and other measures for any loss of land, structures or land use and occupation and of livelihoods and (b) Operationally as the agreed and demarcated area within which construction activities will take place. A power that, based on the customary law, is held by particular indigenous peoples over certain areas in which the peoples live and benefit from the natural resources, including lands therein, for the life needs and life, that emerges from physical and mental relationship hereditarily and in a manner that reflects intact relationship between the indigenous peoples and the areas in question. (Joint Regulation Of Minister Of Home Affairs, Minister Of Forestry, Minister Of Public Works And Head Of National Land Agency On Procedure Of Resolution Of Land Tenurial Issues In Forest Areas (2014)) The date prior to which the occupation or use of the project area make residents or users of the same eligible to be categorized as AP or entitled party to receive compensation and other assistances. The cut-off-date will coincide with the census of APs or entitled parties and the IOL that will be conducted by the National Agency implementing land acquisition. With the use of approved detailed engineering drawings, this activity involves the finalization and/or validation of the results of the IOL, severity of impacts, and list of APs done during the

4 iv preparation of the land acquisition and resettlement plan (LARP). The updating will be carried out during land acquisition implementation phase undertaken by the land acquisition team led by land office. Eminent domain/ Compulsory Land Acquisition Entitled party Entitlement Forest Hak Ulayat Impact Income restoration Inventory of Losses The right of the state using its sovereign power to acquire land for public purposes. National law establishes which public agencies have the prerogative to exercise eminent domain. Party that controls or possesses land acquisition object. Refers to a range of measures of compensation and other forms of assistance provided to displaced/ entitled persons in the respective eligibility category. A single unit of ecosystem of landscape containing bio-natural resources dominated by trees in association with the environment, which cannot be separated one another. (Joint Regulation Of Minister Of Home Affairs, Minister Of Forestry, Minister Of Public Works And Head Of National Land Agency On Procedure Of Resolution Of Land Tenurial Issues In Forest Areas (2014). The authority of masyarakat hukum adat or customary community to collectively govern use of their territory, land and natural resources as the source for their livelihood. Extent of social and economic impacts resulting from the implementation of an activity. In land acquisition/resettlement, the degree of impact will be determined by (a) scope of economic loss and physical displacement/relocation; and (b) vulnerability of the affected population/entitled party. Impact can be positive or negative. This involves rehabilitating the sources of income and productive livelihoods of severely affected and vulnerable APs to enable income generation equal to or, if possible, better than earned by displaced persons before resettlement. This is the listing of assets as a preliminary record of affected or lost assets during the preparation of LARP where all fixed assets (i.e., land used for residence, commerce, agriculture; dwelling units; stalls and shops; secondary structures, such as fences, tombs, wells; standing crops and trees with commercial value; etc.) and sources of income and livelihood inside the corridor of impact are identified, measured, their owners identified, their exact location pinpointed, and their replacement costs calculated. The severity of impact on the affected assets and the severity of impact on the livelihood and productive capacity of the Affected Persons or entitled parties are likewise determined.

5 Land acquisition Land Tenure, Ownership and Use Inventorying Masyarakat Hukum Adat Relocation Replacement cost Resettlement Land Acquisition and Resettlement Plan (LARP) Severely affected persons Land Acquisition activity by way of giving compensation and other measures adequately and at replacement costs for damages/loss to the entitled parties / affected populations in order to reduce adverse social impacts due to the project. Land acquisition and resettlement are conducted involuntary for the benefit of the project. Hereinafter referred to as IP4T: an activity of collecting data on land tenure, ownership and use for further processing using geographic information system to produce maps and information on land tenure by the applicant. (Joint Regulation Of Minister Of Home Affairs, Minister Of Forestry, Minister Of Public Works And Head Of National Land Agency On Procedure Of Resolution Of Land Tenurial Issues In Forest Areas (2014)) A group of people living in a certain geographic area for generations in the Republic of Indonesia bound to their ancestors, inherently maintaining close relations with the environment. Their cultural values define their economic and social systems and legal order. The physical displacement of an AP from his/her pre-project place of residence and/or business. Amount in cash or in kind needed to replace an asset in its existing condition, without deduction for transaction costs or depreciation, at prevailing market value, or its nearest equivalent, at the time of compensation payment. It is the displacement of people, not of their own volition but involuntarily, from their homes, assets, sources of income and livelihood in the area impacted by the Project. A time-bound action plan with budget, setting out the resettlement objectives and strategies, entitlements, activities and responsibilities, resettlement monitoring, and resettlement evaluation. This refers to Affected/ displaced Persons who will i) lose 10% or more of their total productive assets, ii) have to relocate, and/or iii) lose 10% or more of their total income sources due to the project.

6 vi Vulnerable groups These are distinct groups of people who might suffer more or face the risk of being further marginalized due to the project and specifically include households: i) headed by women, ii) headed by persons with disabilities, iii) falling under the regional poverty line, and iv) headed by elderly. NOTE In this report, "$" refers to US dollars. This resettlement framework is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. Your attention is directed to the terms of use section of this website. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

7 CONTENTS Page I. INTRODUCTION 1 A. Project Description 1 B. Project Location 3 C. Anticipated Involuntary Resettlement 3 D. Rationale for the Land Acquisition and Resettlement Framework 6 II. OBJECTIVES, POLICY FRAMEWORK, AND ENTITLEMENTS 6 A. Objectives and Scope of the Land Acquisition and Resettlement Framework 6 B. Legal Framework 6 C. Resettlement Policy Principles for the Project 15 D. Subproject Screening and Minimizing Involuntary Resettlement 16 E. Affected Persons and Eligibility 16 III. SOCIO-ECONOMIC INFORMATION 18 A. Identification of Potential Impacts 18 B. Prescribed Tools for Social Assessment 19 C. Unanticipated Impacts 20 IV. CONSULTATION, PARTICIPATION, AND DISCLOSURE 21 A. Consultation and Participation 21 B. Disclosure 22 V. COMPENSATION AND INCOME RESTORATION 23 A. Compensation and Entitlements 23 B. Income Restoration and Special Measures for the Vulnerable 27 C. Negotiated Land Acquisition 27 D. Voluntary Land Donation 27 VI. GRIEVANCE REDRESS MECHANISMS 28 VII. INSTITUTIONAL ARRANGEMENTS AND IMPLEMENTATION 31 A. Institutional Arrangements 31 B. Capacity Building 34 VIII. BUDGET AND FINANCING 34 IX. MONITORING AND REPORTING 35 A. Monitoring Arrangements 35 B. Monitoring Indicators 35 C. Reporting and Disclosure 37 APPENDIX 1: SUBPROJECT LAR SCREENING CHECKLIST 38 APPENDIX 2: OUTLINE OF A LAND ACQUISITION AND RESETTLEMENT PLAN 39 APPENDIX 3: FIP CONSULTATION AND PARTICIPATION PLANS 42 APPENDIX 4: SAMPLE NEGOTIATED SETTLEMENT AGREEMENT 46 APPENDIX 5: SAMPLE VOLUNTARY DONATION / CONTRIBUTION FORM 47

8 viii LIST OF TABLES Table 1. IR impacts and mitigation measures by Outputs... 5 Table 2. Gaps between Land Acquisition Law and Regulations with ADB SPS and Proposed Project Principles Table 3. Entitlements Matrix Table 4. Criteria and Guidance Notes on Voluntary Donation Table 5. Allowable Resettlement Plan Cost items and Budget Categories Table 6. Suggested Monitoring Indicators (Internal) LIST OF FIGURES Figure 1. Location of Project Interventions in Kapuas Hulu District...4 Figure 2. Location of Project Interventions in Sintang District...4

9 1 I. INTRODUCTION A. Project Description 1. As a pilot country of the Forest Investment Program (FIP) 1 under Climate Investment Funds, the Government of Indonesia (the government) prepared a forest investment plan with support from the Asian Development Bank (ADB), World Bank and International Finance Corporation (IFC). The Community-Focused Investments to Address Deforestation and Forest Degradation project is one of the projects of the forest investment plan to be administered by ADB. The project will support the government and customary communities in their efforts to sustainably manage forests and reduce greenhouse gas (GHG) emissions through enhancing institutional and technical capacity, and improving livelihood of rural communities to address drivers of deforestation and forest degradation. The project will support implementation of community-focused and gender-responsive pilot projects for reducing emissions from deforestation and forest degradation, conservation, sustainable management of forests, and enhancement of forest carbon stocks (REDD+) in four forest management units (FMUs) in Kapuas Hulu and Sintang districts of West Kalimantan province, one of the top five provinces contributing to GHG emissions with a mean deforestation rate of 132,500 ha per year. 2. The project will invest in community-focused activities (e.g. community-based land use planning, community-led forest monitoring and forest fire management, community-assisted forest regeneration and maintenance, community-based ecotourism) in selected districts and/or FMUs to address deforestation drivers such as illegal logging, forest conversion to agriculture, and uncontrolled fires. The project will strengthen the capacities of the local governments in West Kalimantan province, provide policy support to harmonize subnational fiscal policies for REDD+ with national policies, and establish non-monetary incentives, safeguard systems and equitable and gender-responsive benefit sharing arrangement. By promoting sustainable forest management, the project will not only reduce (GHG emissions and enhance carbon stocks, but also provide livelihood co-benefits such as poverty reduction, improved quality of life for forest communities, protection of customary community tenure rights, and enhanced conservation of biodiversity and ecosystem services. 3. Impact and Outcome: The impact will be environmental and livelihood benefits increased. The outcome will be REDD+ implementation in project areas of West Kalimantan province improved. 4. Outputs: a. Community-focused and gender-responsive REDD+ pilot projects in Kapuas Hulu and Sintang districts implemented. Key activities under this output are: (i) Facilitate coordination and information dissemination on SFM and REDD+ between FMU offices and provincial agencies, with improved communication infrastructure. 1 Forest Investment Program (FIP) is one of the three sub-programs under Strategic Climate Fund of Climate Investment Funds (CIF). FIP sub-committee endorsed investment plan ( cif/sites/climateinvestment funds.org/files/fip_6_indonesia_0.pdf) in November 2012 for $70 million ($37.5 million grant and $32.5 million soft loan). The ADB and the World Bank are the partner agencies for the grants while the IFC will provide soft loans. The World Bank project will support decentralized forest management by enabling institutional arrangements at national level and operationalizing FMUs. The IFC project will demonstrate replicable REDD+ business models for small and medium enterprises.

10 2 (ii) Conduct workshops and study visits for FMU staff and local communities, including women, on REDD+ aspects such as safeguards, forest law enforcement, FPIC, conflict mediation and PES. (iii) Formulate community-based forest management (CBFM) agreements with local communities, including women. (iv) Train FMU staff and local communities, including women, in forest products utilization, value addition and enterprise development. (v) Establish a REDD+ monitoring and safeguards information system, with geospatial databases. (vi) Develop spatial and business plans for FMUs, through a participatory process, consistent with CBFM plans. (vii) Support establishment of FMU block XXI and prepare its long-term business plan. (viii) Establish a fund-flow mechanism at community level as a basis for results-based payments for verified performance in SFM and emission reduction. (ix) Implement REDD+ pilot projects 1 with local communities, including women, to generate income and reduce emissions. (x) Provide equipment and training for community-based forest fire management. b. Provincial REDD+ strategy in West Kalimantan effectively implemented. Key activities under this output include the following: (i) Facilitate coordination and information dissemination on forestry planning and policy between provincial agencies and national and district-level agencies, with improved communication infrastructure. (ii) Conduct provincial workshops and training programs on REDD+ concepts, FMU business plan development and carbon accounting, including drafting of regulations. (iii) Establish a provincial monitoring system and safeguards information system for REDD+. (iv) Establish a grievance redress mechanism on tenure and REDD+ activities. c. Subnational fiscal policies on REDD+ harmonized with national policies. Key activities are the following: (i) Analyze fiscal policies with regards to integration of natural capital considerations, in Indonesia and other countries with significant forest resources, and prepare a policy paper. (ii) Facilitate coordination and information dissemination on forestry policy between national and subnational agencies, with improved communication infrastructure. (iii) Conduct policy dialogues to assess gaps and identify remedial measures on fiscal, monitoring and benefit sharing policies and West Kalimantan forest industry strategy, leading to policy harmonization. (iv) Identify relevant funding sources for REDD+ implementation and conduct training to prepare proposals to extend the scope, area and/or time frame of the current project.

11 3 B. Project Location 5. The project will be implemented in 17 villages of four FMUs in Sintang and Kapuas Hulu districts of West Kalimantan province. Of these, six villages in Kapuas Hulu district (Bunut Hulu, Nanga Tuan, Nanga Nyabau, Rantau Prapat, Sibau Hulu, and Sibau Hilir); and four villages in Sintang district - Kayu Dujung, Senangan Kecil, Radin Jaya, and Tanjung Sari are proposed for land-based interventions. All these 10 villages are located in forest area (Kawasan Hutan), area which belongs to the State. In addition, there are seven villages located next to demonstration activities area to support the effectiveness of REDD+ related targets. These seven villages are in non-forest area, or legally known as Area Penggunaan Lain (APL). Figures 1 and 2 shows the current land use of the two districts with proposed FIP interventions. C. Anticipated Involuntary Resettlement 6. Based on field surveys during project preparation stage, it was determined that a few potential negative impacts may result from the implementation of activities under output 1 of the project. They include (i) potential economic displacement or restriction to access among households in utilizing the land due to the development of spatial and business plans for FMUs; and (ii) permanent and/or temporary losses of small areas of land due to rehabilitation of rural roads for commodity transportation and for construction works required for implementation of REDD+ pilot projecs. The implementation of these activities will include the development of supporting facilities which may include: installation of micro-hydro for village electricity supply, solar panels, ecotourism facilities, and small-scale village infrastructure. Village road rehabilitation around 2 km x 2m per village will be built on the existing road, so that the additional land acquisition per village is expected not more than 2,000 m 2 (0.2 hectares), while the micro hydropower might require around 500 m 2. (see Table 1 below) Figure 1. Location of Project Interventions in Kapuas Hulu District

12 4 Figure 2. Location of Project Interventions in Sintang District 7. Potential restriction of local communities and indigenous groups to access land and natural resources may occur as the regional governments will regulate and/or strengthen further/current use of land and forest resources to combat deforestation and land degradation.

13 5 Table 1. IR impacts and mitigation measures by outputs Project output / Type of subprojects Anticipated IR impacts Mitigating measure Output 1. Community-focused and gender-responsive REDD+ pilot projects in Kapuas Hulu and Sintang districts implemented. 1.1 REDD+ pilot projects livelihood program implemented with local communities (including women) includes non-land based activities (including NTFPs) - beekeeping, fish culture, handicrafts, community based ecotourism, and land based activities including 1880 ha of: agroforestry systems (rubber-coffee and rubbergaharu), and rubber plantation. The implementation of these activities will include training as required and the development of supporting facilities, which may include: micro-hydro and small-scaled village Infrastructure (including small roads rehabilitation (2km and 2m wide per village) and facilities for ecotourism) Development of spatial and business plans for FMUs, through a participatory process, consistent with CBFM plans Output 2. Provincial REDD+ strategy in West Kalimantan effectively implemented 2.1 Conduct provincial workshops and training programs on REDD+ concepts, FMU business plan development and carbon accounting, including drafting of regulations. Permanent and temporary losses of small areas of land due to rehabilitation/ construction works may be unavoidable., In addition loss of crops and trees may occur, although not expected to cause severe impacts since rehabilitation works will be carried out within existing right-of-way or, if any,additional land will be expected to be minor. Loss of structure is not expected. Economic displacement or restriction to access among households traditionally utilizing the area; affect access to land and forest resources; Classification and zoning under spatial planning 2 may restrict access to areas and resources presently available to MHAs Economic displacement or restriction to access among households traditionally utilizing the area; access to land and forest resources affected; Secure broad community support/ FPIC. Village regulations and or customary regulations on the protection of customary and local community have to be crafted. Provide transformative perspective on social relations such as understanding the nature of collective work on shifting cultivation may be harnessed into cooperative movement. Provide compensation for lost land and non-land asset loss through several options: Land replacement (arable land) Cash compensation with the amount determined by the local government/village and participate in the livelihood program under output 1 In case of voluntary donation, the APs will be provided with the participation of the land based livelihood program FMU authorities need to be socially sensitive to community needs as well as culturally sensitive to traditions to generate meaningful and effective participation. Social preparation has to be considered and planned well with communities. Providing alternative livelihood for household income design in close participation of communities Meaningful consultation and broad community support will have to be observed and harness partnership with local NGOs. Forestry authorities need to be socially sensitive to community needs as well as culturally sensitive to traditions to generate meaningful and effective participation. Social preparation has to be considered and planned well with communities Providing alternative livelihood for household income design in close participation of communities Meaningful consultation and broad community support will have to be observed and harness partnership with local NGOs. 2 A system and process of planning spatial layout, spatial use and spatial use control. Joint Regulation of Minister of Home Affairs, Minister of Forestry, Minister of Public Works and Head of National Land Agency on Procedure of Resolution of Land Tenurial Issues in Forest Areas

14 6 D. Rationale for Resettlement Framework 8. The resettlement framework (RF) was prepared by the Directorate General of Social Forestry and Environmental Partnership (Direktorat Bina Usaha Perhutanan Sosial dan Hutan Adat - BUPSHA), MOEF as the executing agency (EA) of the project. The RF establishes basic principles and guidelines that should be adhered by the implementing agencies in the selection of subproject, screening and categorization of sub-projects, resettlement assessment, preparation and implementation of resettlement plan (RP) for the subprojects. Appendix 1 provides an outline of the preparation of RP. 9. FIP is set at category B for IR safeguards and any subproject with potential category A will be excluded in the project activities. Subprojects shall be selected based on a set of criteria established that include (i) located in and or nearby FMU area; (ii) poor communities who depend much on forest and forest land in making their living; (iii) expression of need or acceptance by community for the project. In anticipating negative impacts and taking appropriate mitigation measures the project needs community meaningful participation. 10. Despite the identification of participating villages for the project, details have not been prepared and finalized as this project is anchored on community-based forest management approaches requiring detailed plans from communities prior to project implementation. Should land acquisition and restriction to access be necessary, this Project will ensure that any negative impacts are avoided, properly managed and minimized and that a RP at district level will be prepared. II. OBJECTIVES, POLICY FRAMEWORK, AND ENTITLEMENTS A. Objectives and Scope of the Resettlement Framework 11. The project resettlement policy harmonizes relevant Indonesian laws and procedures with those of the ADB Safeguards Policy Statement (SPS). The objectives of this RF are to: (i) (ii) (iii) (iv) Avoid involuntary resettlement wherever possible; Minimize involuntary resettlement by exploring project and design alternatives; Enhance, or at least restore, the livelihoods of all displaced persons in real terms relative to the pre-project levels; and Improve the standards of living of the displaced poor and other vulnerable groups. B. Legal Framework 1. National Laws of the Government of Indonesia (GOI) 12. The project will target the development of community investment for economic development and will involve upgrading simple village road, small irrigation, micro hydropower, and other community social infrastructure. These activities will require small plots of land and as the required lands are for the community-based development, the land will be acquired through negotiated land acquisition and in some cases the lands might be acquired through voluntary contribution. Potential impact on restrictions of access to land and natural resources due to activities of outputs 1 and 2 may occur.

15 7 13. Act No. 2/2012 on Land Acquisition for the Development for the Public Interest and its implementing regulations. 3 The main regulation applied for the project land acquisition is Act No 2/2012. The law stipulates that land acquisition should be undertaken by involving all concerned stakeholders and taking into account the interests of development and community. Land acquisition should be conducted by providing fair and adequate compensation to the entitled parties. The act recognizes that: (i) persons controlling and utilizing land are entitled to compensation; (ii) all losses lost land and non-land assets, other structures that can be valued should be evaluated by appraiser plot by plot; (iii) project location permit will be required that should refer to the spatial planning; (iv) land acquisition will be undertaken by National Land Agency. The implementing regulation of the Act No. 2/2012, the Presidential Regulation No. 40/2014 stipulates that land acquisition less than five hectares can be directly undertaken between agency needing the land and land rights holder by way of purchasing, exchange, or other means agreed by both parties In the Act No. 2/2012, compensation for land acquisition objects covers other appraisable loss that means nonphysical loss equivalent to money value. 5 Therefore, losses in terms of restriction/limitation or restriction to access to natural resources such as marine-fishery resources that can impact on the economic activities of people are now categorized as losses by the Law and may be evaluated for compensation purposes. 6 The Land Law of 2012 specifically upholds the following: (i) Acquisition of Land in the Public Interest shall be performed through planning involving all the guardians and stakeholders. Guardians means, inter alia, customary leaders and clerics, 7 and (ii) The giving of Compensation for Objects of the Acquired Land shall be directly made to the Entitled Party. 8 Compensation for indigenous land shall be given in the form of substitute land, resettlements, or other forms as agreed upon by the relevant indigenous people. Land tenure holders means parties holding means of proof issued by the competent official documenting the existence of the relevant land tenure, for example, the holders of deed of sale and purchase of un retitled land, the holders of deed of sale and purchase of uncertified customary titles/rights, and the holders of dwelling permits. 15. Joint Regulation of Ministry of Domestic Affairs, Ministry of Forestry, Ministry of Public Works, and Head of National Land Agency No. 79/ 2014, No. PB.3/Menhut-- II/2014, No. 17/PRT/M/2014, No. 8/SKB/X/2014 on the Procedure for Settling the Land Control in Forestry Area. This regulation was issued in order to resolve issues on people rights over forest areas, insofar as they still hold tenure over lands in forest areas and the rights are in compliance with the principles of the Unitary State of Indonesia, people rights need to be recognized and protected Article 1 (17) stipulates that recognition of right to lands is the granting of right to lands 9 which have no legal evidences of ownership but have been proven in fact that 3 The regulations include Perpres No. 71/2012 on Implementation of Land Acquisition for the Development of Public Interest. The National Land Agency through Regulation No. 5/2012 issued the Implementation Guideline for Land Acquisition following Perpres No. 71/ Presidential Regulation No. 40/2014, Article For example, loss due to loss of business or job, cost of change of location, cost of change of profession, and loss of value of the remaining property. 6 The compensation for may be in any of the following forms (Article 36): (i) money; (ii) substitute land; (iii) resettlements ; (iv) shareholding ; or (v) other forms as agreed upon by both parties. 7 See Law No. 2/2012, Art. 7: (3). 8 Ibid, Art. 40: Those entitled shall be, inter alia: a. landholders; b. land concessionaires; c. waqf organizers, in the case of waqf land; d. ex-customary land owners; e. indigenous people; f. parties in possession of the state land in good faith; g. land tenure holders; and/or h. owners of buildings, plants or other objects related to land. 9 Granting of land rights is governmental authorization that grants rights over State lands. Joint Regulation Of Minister Of Home Affairs, Minister Of Forestry, Minister Of Public Works And Head Of National Land Agency On Procedure Of Resolution Of Land Tenurial Issues In Forest Areas, 2014.

16 8 it has been physically controlled for 20 years as it is stated in the Article 61 of Agrarian Ministry/Head of National Land Agency Decree No. 3/1997. Article 9 of the Joint Regulation stipulates that recognition of rights 10 of customary communities is carried out in line with laws and regulations Forestry Acts (Act No. 5 of 1967 and Act No. 41 of 1999). Act no. 41/1999 Law on Forestry regulates land acquisition in forests, requiring compensation land to be acquired for afforestation in a ratio of 2:1. A major ambiguity in Article 1 of the Forestry Law ruled that the word state should be scrapped in the provision: customary forests are state forests located in the areas of customary communities. Article 5 of the same law was revised to also show that state forest does not include customary forest. The ruling was made in favor of a petition filed by Indonesia s national indigenous peoples alliance, AMAN (Aliansi Masyarakat Adat Nusantara) 12 in March Other key laws and regulations that impinge on land acquisition and resettlement issues include: (i) Law 5 of 1960 on Basic Rules of Agrarian Principles (State Gazette of the Republic of Indonesia Year 1960 No. 104, Supplement of State Gazette of the Republic of Indonesia No. 2043); acknowledges customary rights of Indigenous Peoples (IPs). (ii) Act No. 39 of 1999 on Human Rights. Article 5, elucidation describes the vulnerable groups include the elderly, children, the poor, pregnant women and people with disabilities. Article 6 Para. 1: In the framework of maintenance of human rights, the differences in and the needs of, adat law communities are observed and protected by the law of society and Government. Article 6 Para. 2: Cultural identity of adat law communities, including rights to ulayat land, is protected in line with the evolvement of time. The Act further identifies vulnerable groups to include the elderly, children, the poor, pregnant women and people with disabilities. Articles 36 and 37 of Act 39 of 1999 concerning property rights and acquisition of property rights protect adat communities ulayat right. Thus, acquisition of ulayat land by government must be done through due process of law following the free, prior and informed consent of adat communities. (iii) Law 23 of 2014 on Local Governments. The law stipulates on the authority of the national government, provincial government, and district/city government on recognition of MHA, local wisdom or traditional knowledge and rights to local wisdom or traditional knowledge, rights of MHA to PPLH, and capacity building of MHA. 10 A process of granting of rights whose ownership evidences are absent but have already been represented by the physical tenure for a period of twenty (20) years as provided under Article 61 of Regulation of State Minister of Agrarian Affairs/Head of National Land Agency No. 3/ This Joint Regulation is anchored on the following: (i) Constitutional Court Ruling No. 34/PUU-IX/2011 the State control of forests shall take into account and respect people land rights; (ii) Constitutional Court Ruling No. 45/PUU-IX/2011 Forest Area Designation shall immediately be finalized to generate legal and equitable forest areas; (iii) Constitutional Court Ruling No. 35/PUU-X/2012 customary forests are not State forests; (iv) Joint Memorandum of Understanding (Joint MOU) on Acceleration of Indonesian Forest Area Designation Process has been executed by 12 Ministries/State Agencies (11 March 2013). 12 In 1999, a national congress of Indonesian indigenous peoples took place, attended by over 200 adat community representatives from 121 ethnic groups. The ccongress agreed to establish a national alliance of indigenous peoples, AMAN. By 2001, AMAN had 24 affiliated organizations in islands and provinces. It has several objectives, including the restoration to adat communities of sovereignty over their socioeconomic laws and cultural life, and control over their lands and natural resources and other livelihoods.

17 9 (iv) (v) (vi) (vii) (viii) Law No.11/2005 on the Ratification of the International Covenant on Economic, Social and Cultural Rights. This Act protects people rights of economy, social, and culture including right to live descent and protection of culture. As stated in Article 11 of the Convention, the state recognizes the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions. The State will take appropriate steps to ensure the realization of this right, recognizing the essential importance of international cooperation based on free and prior informed consent. Law 26 of 2007 on Spatial Planning (State Gazette of the Republic of Indonesia Year 2007 No. 68, Supplement of State Gazette of the Republic of Indonesia No. 4725); provides that development and land acquisition in the public interest should be carried out in accordance with regional spatial planning. Presidential Decree No. 34/2003 on National Policy on Land regulates authorities of national and local governments on land. It stipulates that the authorities of local government on land include; i) undertake land acquisition for development; ii) provide compensation and allowance (santunan) for land acquisition. The Law No. 11/2009 on Social Welfare and its implementing regulation Ministry of Social Welfare Decree No. 39/2012 on Delivery of Welfare. Vulnerable / severely affected people are identified as early as possible through the Social Impact Assessment of AMDAL as referred to in the Environmental Law no. 32/2009 on Environmental Protection and Management; Indonesia Government Government regulation (PP) No. 38/2011 with regard to river management. Ministry of Public Work no. 63/ 1993 with regard to riverbank. Regulate riverbank (Bantaran) use, river and Sempadan right of way and benefits derived from the rivers/streams. The integrity of the riparian function is a key consideration in any review for status quo. (ix) Law 6 of 2014 on Village (State Gazette of the Republic of Indonesia Year 2014 No. 7, Supplement of State Gazette of the Republic of Indonesia No. 5495). 2. ADB Safeguards Policy Statement of The objectives of the ADB social safeguards policy are to avoid involuntary resettlement whenever possible; to minimize involuntary resettlement by exploring project and design alternatives; and to enhance, or at least restore, the livelihoods of all displaced and vulnerable persons in real terms relative to pre-project levels, and to improve the standards of living of the displaced poor and other vulnerable groups. 19. The absence of legal title to land cannot be considered an obstacle to compensation and rehabilitation privileges per ADB policy. All persons affected by the project, especially the poor, landless, and semi-landless persons shall be included in the compensation, resettlement, and rehabilitation package. APs and/or AHs, whichever is deemed applicable, who are unable to demonstrate a legalizable or recognizable claim to the land being acquired will be eligible for compensation with respect to non-land assets only, and not the land itself. They will however be provided with other benefits and allowances as provided to other APs. 20. The following ADB SPS principles on involuntary resettlement are stipulated and will also apply to the project. (i) Carry out meaningful consultations with affected persons and relevant stakeholders. Inform all displaced persons of their entitlements and ensure their

18 10 (ii) (iii) (iv) (v) participation in planning, implementation, and monitoring of resettlement programs. Pay particular attention to the needs of vulnerable groups and establish a grievance redress mechanism. Develop procedures in a transparent, consistent, and equitable manner, if land acquisition is through negotiated settlement in order to ensure that those people who enter into negotiated settlements will maintain the same or better income and livelihood status. Prepare a RP elaborating on displaced persons' entitlements, the income and livelihood restoration strategy, institutional arrangements, monitoring and reporting framework, budget, and time-bound implementation schedule. Disclose a draft RP including documentation of the consultation process in a timely manner, before project appraisal, in an accessible place and a form and language(s) understandable to affected persons and other stakeholders. Disclose the final RP and its updates to affected persons and other stakeholders. Monitor and assess resettlement outcomes, their impacts on the standards of living of displaced persons, and whether the objectives of the RP have been achieved by taking into account the baseline conditions and the results of resettlement monitoring. Disclose monitoring reports. 21. The ADB policy on IPs has been integrated with IR under the new ADB SPS and will likewise govern this RF. IP safeguards are triggered if a project directly or indirectly affects the dignity, human rights, livelihood systems, or culture of IPs or affects the territories or natural or cultural resources that IPs own, use, occupy, or claim as their AD. 22. The ADB policy on gender and development adopts gender mainstreaming as a key strategy for promoting gender equity, and for ensuring participation of women and that their needs are explicitly addressed in the decision-making process for development activities. 23. The ADB Public Communications Policy seeks to encourage the participation and understanding of people and other stakeholders affected by ADB-assisted activities. Information on ADB-funded projects should start early in the preparation phase and continue throughout all stages of project development, in order to facilitate dialogue with affected people and other stakeholders. 3. Comparison of Government Law and Regulations with ADB SPS and Proposed Project Principles 24. While there will be issues on land acquisition and potential restriction on access to land and livelihood because of the village land use management, these are not foreseen to be major issue and will not trigger category A and relocation. This comparative analysis therefore limits its comparisons by not including relocation as an option. 25. The GOI enhanced its country system in order to address land acquisition issues for public interest development project purposes. The new Land Acquisition Law No. 2/2009 and its implementing rules and regulations approximate harmonization with the ADB SPS of The new law grants that persons with no legal title over the land they occupy or utilize are entitled to compensation 13 for improvements found thereon, including compensation for job and business 13 See Act No.2/2012 Elucidation of Article 40.

19 11 losses, moving cost, 14 etc. A land acquisition plan also needs to be prepared by the agency requiring land. People affected by land acquisition are consulted and their complaints heard and resolved in the most expeditious way during the planning and implementation of land acquisition. 26. Most of principles in Law No. 2/2012 have been in line with ADB SPS. However, there are still some gaps between the new Land Acquisition Law of Indonesia and ADB s SPS, but the gaps have been addressed by the provisions of other relevant laws, regulations, and guidance. Some gaps between ADB SPS 2009 and Indonesian government legislation are presented in Table Elucidation of Article 40 of Law No. 2/2012 with the following provisions: For building rights or land use right, Compensation granted to the holder of building right or use rights on buildings, plants, or other objects related to land owned by him/her, while Compensation on land granted to the holder of the ownership or management rights.

20 12 Table 2. Gaps between Government Land Acquisition Law and Regulations with ADB SPS and Proposed Project Principles Principles Level of compensation and bases of calculation: Depreciation of affected structure value Indonesian Regulations; Law No 2/2012 and Presidential Decree No. 71/2012 Compensation will be provided based on valuation of independent appraiser for a parcel by parcel of land that include (i) land; (ii) over ground and underground spaces; (iii) building; (iv) plants; (v) objects related to land and/or; vi) other appraisable loss such loss of business, jobs, change of profession, and moving costs. For affected buildings, MAPPI applies solatium (emotional compensation) of 10% -30% of the total compensation for physical loss. ADB Policy Gaps Project Policy The rate of compensation will be calculated at full replacement cost that will be based on; (i) fair market value; (ii) transaction cost; (iii) interest accrued; (iv) transitional and restoration cost; and (v) other applicable payment. No deduction on taxes and administrative costs for affected lands, as well as depreciation in the value of the affected structure will be applied. The law is silent on the issue of whether or not depreciation will be applied when calculating compensation for affected structures. Valuation standard set by Independent appraisers association (MAPPI) indicates that depreciation for physical condition of the affected building is applied in order to meet sense of justice. 15 For affected buildings, MAPPI applies solatium (emotional compensation) of 10% - 30% of the total compensation for physical loss. Tax incentive is provided to: (a) person who supports the project; (b) does not file a complaint related to project location determination and/or compensation. Persons who own, control, use and utilize land acquisition object are entitled for compensation. Lack of formal legal title to land is not a bar to entitlement. The principle of full replacement cost will be applied. Capital gains tax and the costs of transferring ownership, including the cost of new land certificates, will not be deducted from the compensation of those who will lose lands. Non-structure is expected to be affected by the project. If any structure to be affected, compensation at full replacement cost for affected structures will be determined based on the replacement cost of a new building with adjustment with physical condition 16. Depreciation deduction of the structures physical condition will be covered through the provision of emotional compensation (solatium). Dismantled materials become the property of the state. 15 Indonesia Valuation Standards 306 (SPI 306). Land Acquisition Assessment For Development for the Public Interest. Code of Ethics Indonesia Appraisers and Indonesia Standard, 2013, Jakarta, Gelora Karya Bharata, Compensation will be based on i) the market value; ii) transaction costs; iii) accrued interest; iv) transition costs and repairs; v) other applicable payments.

21 13 Principles Relocation assistance: Transitional allowance. High Risk of Impoverishment Indonesian Regulations; Law No 2/2012 and Presidential Decree No. 71/2012 Resettlement is one of the compensation options that shall be given by the agency needing the lands via Land Acquisition Implementation Committee. The implementation of resettlement shall continue for maximum 1 (one) year since the establishment of compensation form by Land Acquisition Implementation Committee. Location of resettlement area shall be based on the deliberation with entitled parties. Moving cost is covered under the compensation elements. Entitled party means any party by whom objects of the acquired land are possessed or owned. Entitled party with high risk of impoverishment is not covered in the new Land Acquisition Law. However, it is covered under the Law No. 11/2009 on Social Welfare and its implementing regulation Ministry of Social Welfare Decree No. 39/2012 ADB Policy Gaps Project Policy If there is relocation, provide assistance for physically or economically displaced persons including i) secure tenure to land and housing with comparable access to employment and production opportunities; ii) assist to integrate and share benefits with hosts, iii) restore social amenity; iv) provide moving and transitional support e.g. land preparation, training, access to credit, civic infrastructure and community services if required. Particular attention must be given to the needs of poor APs and vulnerable AHs that face the risk of further marginalization and impoverishment. Law No. 2/2012 and PD No, 71/2012 is silent about transition assistance for the physically relocating APs. However, Act No. 9/2009 on Transmigration and Ministry of Transmigration Decree No. 17/1997 stipulates on transmigration services including food aid during transition period. The Indonesia appraiser standard provides solatium for the building/structure owners including physically relocated AHs. Law No. 2/2012 and PD No.71/2012 is silent about paying special attention to poor APs and vulnerable AHs and severely AHs. Transition and moving allowance will be provided for relocating AHs and will be covered in solatium. Livelihood / income rehabilitation program will be provided to severely affected and vulnerable populations. Programs for vulnerable groups refer to Law No. 11/2009 and its implementing regulations. In this Law, the regional government is responsible for addressing these issues. The programs that will be implemented are included in the social Action Plan for affected persons / households.

22 14 Principles Indonesian Regulations; Law No 2/2012 and Presidential Decree No. 71/2012 ADB Policy Gaps Project Policy Monitoring of Project Implementation To cover or identify vulnerable / severity impacted people by the project as early as possible it can be covered in Social Impact Assessment of AMDAL as referred in Environmental Law no. 32/2009; Government of Republic of Indonesia Regulation No. 27/2012 on Environmental Permit, Ministry of Environment Regulation No. 17/2012 on guidelines for Community Involvement In Analysis Process of Environmental Impact and Environmental Permits, Head of BAPEDAL Decree No. 299/1996 on Technical Guidelines for the Social Aspects Study in preparation of the Environmental Impact Assessment. Monitoring and evaluation of the performance of Acquisition of Land in the Public Interest shall be made by the government. National Land Agency shall monitor and evaluate the occupation, ownership, use and utilization of land acquisition results for the development in public interests. ADB requires monitoring of RP implementation by the executing agency for resettlement category B projects, and by an independent external organization for resettlement category A projects The Law No. 2/2012 and PD No, 71/2012 is silent about monitoring on resettlement impact to the entitled parties and external monitoring by independent external party Severely affected Residents / households and other vulnerable groups will be identified at land acquisition / Resettlement Planning. Livelihood improvement assistance will be provided to them through: i) social programs implemented by local government; ii) development program for community under the project components. Dirjen Bina Pembangunan Daerah will facilitate the coordination of program implementation at the regional level. FIP is classified, as category B therefore external monitoring of resettlement implementation is not required.